Bitcoin of America, a cryptocurrency ATM provider, has reached an agreement with the Connecticut Department of Banking to halt its operations due to a lack of proper licensing. The Department of Banking stated on May 22 that Bitcoin of America failed to obtain the necessary license to operate Bitcoin ATM kiosks in the state. The consent order was enforced after several consumers in Connecticut fell victim to a scam involving these kiosks, resulting in substantial financial losses. As a result, Bitcoin of America made restitution of $86,000 to affected consumers. Following a criminal indictment, the company is now winding down its operations in Connecticut.
Jorge Perez, the banking commissioner, issued a warning against using unlicensed crypto kiosks. He cautioned that investors are often coerced and deceived into depositing cash into these kiosks and transferring an equivalent amount of cryptocurrencies to the scammers. Bitcoin of America, which facilitates the transfer of consumer funds to third parties, is required to be licensed as a money transmitter. Legislation is being considered in the state to introduce more regulations and consumer protections, including requiring digital currency kiosks to be licensed as money transmitters in Connecticut.
Furthermore, the Connecticut State Police, Department of Banking, Office of the Attorney General, and the Department of Consumer Protection jointly issued a scam alert, advising against using unlicensed crypto and Bitcoin ATMs. In March, 52 Bitcoin of America ATMs and kiosks suspected of being involved in scams were confiscated in Ohio.
The global geopolitical instability and the crackdown on unlicensed operations have negatively impacted the overall Bitcoin ATM network. In March alone, there was a significant decline, with 3,627 crypto ATMs going offline, marking the largest-ever monthly decrease in crypto ATMs.